For numerous global enterprises, it has become crucial to comply with various regulations in order to sustain their market reputation and build good customer relationships with enhanced trust. However, for this purpose, these industries need to conduct Know Your Customer regulatory measures, which are explicitly designed to protect your business against fraudulent activities such as money laundering or financing terrorism.
However, KYC is conducted in numerous ways and mobile KYC is one of them. In this blog, we will discover everything you need to know about mobile KYC, how it works, and how it is different from other types of KYC.
What is Mobile KYC?
Mobile KYC is one of the types of KYC, which refers to the process of verifying the identity of an individual through a smartphone. In general, mobile KYC is conducted through a business mobile application or via its official website through the mobile internet browser.
In this way, it is considered that being a subset of eKYC, it incorporates KYC procedures that are conducted entirely digitally. Yet, one of the main differences between the two processes is that eKYC can be executed via either smartphones or desktop computers. While mobile KYC is only conducted through mobile devices.
Mobile KYC Use Cases
Businesses, especially those that are associated with financial industries are obliged to follow KYC regulations to integrate Anti-Money Laundering compliance and prevent their firms from financial crimes and fraud. Therefore, some of these industries choose to implement mobile KYC to get compliance with regulatory standards. These industries include:
The cryptocurrency exchange sector is one of the industries in which a lot of fincrimes take place. Therefore, this industry is subject to remain compliant with KYC, AML, and other regulatory requirements. For many cryptocurrency exchangers, the most common and convenient method is through their mobile devices, either via applications or websites. In fact, it has been found that many crypto businesses are done on mobile devices first than desktops. That is why a strong mobile KYC implementation is essential in the crypto industry.
On the other hand, several e-commerce platforms are also subject to conducting KYC, explicitly dealing with age-restricted commerce such as tobacco, marijuana, alcohol, or other drugs. Not only this, but even other digital businesses also need to follow KYC regulatory standards to prevent online crimes.
However, it is discovered that most of the e-commerce businesses globally are moving toward smartphones. Thus, integrating mobile KYC solutions is increasingly becoming a demand of many e-commerce platforms.
According to a report conducted by Business of Apps, mobile e-commerce generated revenue worth approximately $3.56 trillion globally in 2021. While that number is impressive in and of itself, even more, impressive is the fact that that figure accounts for more than half of all e-commerce sales.
Banks and other financial industries need to integrate effective KYC regulations in order to minimise the risks of money laundering and other crimes. However, with the rising trend of mobile banking all across the world, the percentage of online fraud and risks has also increased.
It is reported that almost one in three American use mobile banking services instead of acquiring services from the banks physically. This is because of enhanced convenience and easy accessibility. Unfortunately, where it brings convenience, the risk of cybercrime also comes along with it. That is why banks and related sectors need to implement mobile KYC in order to remain at the top of the market.
How is Mobile KYC Conducted?
The process of mobile KYC varies as per the mobile application and service provider to verify the person’s identity through a smartphone. Although it can be done in multiple ways via biometric authentication and document verification. But, a specific procedure is followed to carry out mobile KYC, which is mentioned below:
- The user needs to provide personal information such as their name and date of birth through the company’s mobile application.
- The individual needs to take a picture of their government-issued documents, such as a driving license or passport, and upload it to the app.
- In order to conduct mobile KYC, the application uses OCR technology to verify the authenticity of the provided information.
- In the meantime, the app uses facial recognition technology to identify the image and compared the photo with the picture on the documents.
- In case of unsatisfactory results, the application may lead to further measures such as the customer’s address or checking financial histories.
However, once the user identity is verified, they can be granted access to financial or banking services. Anyhow, mobile KYC is a mandatory process for almost every business to fight against money laundering, corruption, and financial terrorism.
In this KYC AML guide, you learned about mobile KYC, which is another type of KYC. it helps financial firms such as banks or insurance companies verify customer identity. However, this type of KYC process is done differently as compared to digital or in-person KYC. it is conducted using customers’ mobile devices through the company’s website or application. Yet, mobile KYC is explicitly designed for businesses that mostly run on mobile devices such as e-commerce, digital banking, or crypto to ensure the financial security of firms and customers.
Frequently Asked Questions
Mobile KYC is considered to be a secure type of KYC that is implemented using proper security measures. It protects user's personal information and keeps the data is end-to-end encrypted.
Yes! Mobile KYC is designed to be done remotely using individuals’ smartphones. It allows customers to execute the procedure using the company’s official website or through the application without visiting physically.